Why Ethical Islamic Loans are Growing in Popularity
Why is it that suddenly Islamic loans seem to be making an appearance on the “Menu” of local banks as well as short term lenders in the UK currently? It’s not that hard to understand, if you really think about it.
According to TheCityUK, Sharia-compliant assets in the UK in 2017/18 amounted to a massive £4.7 billion. This places the UK in lead in terms of Western countries offering ethical Islamic business funding. It’s hard not to notice just how popular Islamic loans are becoming, especially when you consider that there are 5 licensed Sharia compliant banks in the UK and more than 70 listed Sukuk on the London Stock Exchange already. And this is only set to increase in the months and years to come. But why, you may ask? Why is ethical Islamic finance becoming so popular all of a sudden? In fact, it’s becoming the norm!
The simple fact that one of the world’s most advanced and attractive tax and regulatory systems for Islamic finance exists in the UK, might have something to do with it. But there are sure to be a plethora of other reasons why this type of finance is taking the UK financial lending market by storm.
3 Reasons Why Islamic Business Funding Has Become so Accessible in the UK
Let’s take a look at why Islamic finance is more prominent than it has been in the past in the UK.
- The Growth of the Muslim Population.
The Muslim population has grown exponentially across the globe, the United Kingdom included. In a survey concluded in 2018, it was stated that there were 3.4 million Muslims living and working in the United Kingdom. That’s a rather large chunk of the population; in fact it’s 5%. Predictions show that by 2050, there will be more than 13 million Muslims in the United Kingdom, which will amount to 16.7% of the population. With growth of a population, comes the need for services. Many of the Muslims living and working in the UK require access to funding and because of the Muslim belief system, it is important that business finance options, that cater to those beliefs, are created and set in place. Thus, ethical Islamic loans are becoming more available. There’s nothing stopping a Muslim entrepreneur turning down Islamic business loans, but nowadays, there’s every reason why they should be applying for it.
- Lack of Understanding…Until Now.
Understanding Islamic finance can be tricky and it’s no secret that in the past, not many lenders or Muslim entrepreneurs have been able to get a firm grasp on what Sharia-compliant finance is. In fact, according to research, 33% of the Muslim population seeking finance say that they glean what they know about Islamic finance from the advice of Islamic scholars and financial experts. The balance of the group mentioned that the internet is their source for finding information on Islamic business finance.
What does this mean? This means that in the past, Islamic finance providers were not reaching out to the Muslim community. They haven’t been making it clear that they have Islamic finance on offer and they haven’t been telling Muslims of the benefits thereof. According to research released by Gatehouse Bank, as much as 46% of the Muslim population has never used Islamic finance. This indicates that there are other reasons at play as to why this form of finance wasn’t always popular, but is becoming popular now. This is because more and more financial lenders are starting to understand the needs of the Muslim business community and are finally taking steps towards creating Sharia compliant financial packages.
- Unsecured Loans that Come With No Interest.
If someone told you that you could get unsecured Islamic business funding of between £1,000 and £5,000 and it would come with absolutely no interest charged, and will be paid out within 24 hours, what would you say? You would probably warmly welcome this type of loan into your life. And that is exactly the case with ethical Islamic loans. According to Sharia law, Riba (which is interest charged) is absolutely forbidden on a loan. Islamic Merchant Cash Advances have been growing in popularity because they come with no interest and no fixed repayment terms (making these loans fully Sharia compliant). Customers simply pay back the loan using a small pre-arranged percentage of their future customer card sales. Because there is no interest charged and the loan model is so convenient, Islamic loans are growing in popularity.
Have You Considered Ethical Islamic Loans for Your Muslim Business?
If you are a Muslim entrepreneur and are part of the percentage of the population that hasn’t considered Sharia-compliant business loans yet, perhaps now is the time to try. As these loans are steadily growing in popularity and readily available, it’s perhaps time for you to take advantage of that – for your faith and for your business.